Changing the landscape of many suburbs on the fringes of cities, gentrification can spark controversy. Gentrification refers to what happens when a low socio-economic neighbourhood undergoes a transformation and becomes a high-income area. Think Rosebery in Sydney’s inner city, Nundah in Brisbane’s north, Collingwood in Melbourne’s inner north and Stepney on the cusp of Adelaide’s CBD.
For buyers and investors, gentrifying neighbourhoods are about affordability and potential for capital growth. Whether you are looking for a home that needs superficial work only, a knock-down/rebuild, or a property fit for renovation, the name of the game is to identify areas during the early stages of gentrification so that you can maximise your investment. Every area has peaks and troughs, so look to buy when stock levels are higher than usual. This will assist with negotiating a better price. And if you’re coming in during the later stages of the gentrification process, look for the worst house on the best street, or for something in the surrounding suburbs. Those suburbs are the next rising stars – you will see properties that are still comparatively undervalued.
The trick is to find these areas before everyone else does. To do that, look for concentrations of new housing and renovations in an area. Are there plans for improved infrastructure, such as transport or shopping centres, or new developments in the pipeline? What cafés and retailers are moving into the area? And look at how the demographics are shifting – in other words, do your research.
Setting yourself up to take advantage of a gentrifying neighbourhood will come about by thorough research and ensuring you are well positioned to take advantage of opportunities when they arise.